x QUARTERLY REPORT
UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended JUNE
30, 2012

¨TRANSITION
REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT

For the transition
period from____________ to _____________

Commission file number 000-31385

GLOBAL FOOD TECHNOLOGIES, INC.

(Exact name of registrant as specified
in charter)

Delaware

52-2257546

(State of incorporation)

(IRS Employer Identification No.)

802 North Douty Street, Hanford, California

93230

(Address of principal executive offices)

(zip code)

559-589-0100

(Issuer’s telephone number)

113 Court Street, Hanford, California 93230

(Former name, former address and former
fiscal year, if changed since last report)

Indicate by check mark whether the issuer (1) filed all reports
required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes x No ¨

Indicate by check mark whether the registrant has submitted
electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant
to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that
the registrant was required to submit and post such files). Yes x No ¨

Indicate by check mark whether the registrant is a large accelerated
filer, an accelerated filer, non-accelerated filer, or a smaller reporting company.

Adjustments to reconcile net loss to net cash used in operating activities:

Depreciation

34,583

37,925

Common stock issued for services and liabilities

87,496

48,250

Changes in operating assets and liabilities:

Accounts receivable

(7,812

)

27,971

Inventory

66,525

(11,838

)

Prepaid expenses

(15,534

)

7,580

Other assets

(2,911

)

-

Accounts payable

(81,351

)

27,526

Accrued liabilities

74,226

176,267

Cash used in operating activities

(1,298,994

)

(1,583,675

)

CASH FLOWS FROM FINANCING ACTIVITIES

Proceeds from issuance of trade finance notes payable

205,000

26,500

Repayment of trade finance notes payable

(5,000

)

-

Sale of common stock – net of issuance costs

957,651

1,546,500

Net cash provided by financing activities

1,157,651

1,573,000

CHANGE IN CASH

(141,343

)

(10,675

)

CASH – BEGINNING OF PERIOD

194,662

1,004,654

CASH – END OF PERIOD

$

53,319

$

993,979

SUPPLEMENTAL DISCLOSURES

Interest paid

$

40,719

$

75,597

Non-cash financing transactions:

Issuance of common stock for accrued liabilities

$

58,500

$

-

See accompanying notes to condensed consolidated
financial statements

6

GLOBAL FOOD TECHNOLOGIES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS

JUNE 30, 2012

1. Description and nature of the business, organization
and basis of presentation.

Global Food Technologies, Inc. (the “Company”,“we”,“our”or“us”)
is a life sciences company focused on food safety processes for the food processing industry by using its proprietary scientific
processes to substantially increase the shelf life of commercially packaged seafood and to make those products safer for human
consumption. The Company has developed a process using its technology called the “iPura™Food Processing System”. The System is installed in processor factories
in foreign countries with the product currently sold in the United States. The Company’s ability to generate significant
revenue will depend, among other things, on its ability to demonstrate the merits of the iPura™
system, as well as brand development and establishing alliances with suppliers and vendors.

The Company is a registrant under rules
and regulations of the United States Securities and Exchange Commission (“SEC”) but has not yet obtained a listing
on any stock exchange, and its shares are not otherwise quoted or trading on any electronic marketplace.

Going concern

The accompanying condensed consolidated
financial statements have been prepared on the basis that the Company will continue as a going concern, which assumes the realization
of assets and the satisfaction of liabilities in the normal course of business. At June 30, 2012, the Company has an accumulated
deficit approximating $69,500,000, and for the six months ended June 30, 2012, negative cash flows from operations of approximately
$1,300,000. Additionally, the Company has negative working capital at June 30, 2012 of approximately $4.2 million. The Company’s
ability to continue as a going concern is predicated on its ability to raise additional capital, increase sales and margins, and
ultimately achieve sustained profitable operations. The uncertainty related to these conditions raises substantial doubt about
the Company’s ability to continue as a going concern. The accompanying condensed consolidated financial statements do not
include any adjustments that might result from the outcome of this uncertainty.

Basis of presentation

The accompanying unaudited condensed consolidated
financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America
for interim financial information and pursuant to the rules and regulations of the United States Securities and Exchange Commission.
Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for
complete financial statements. In the opinion of management, all adjustments considered necessary in order to make the financial
statements not misleading, have been included. These financial statements should be read in conjunction with the Company’s
Annual Report on Form 10-K for the year ended December 31, 2011, filed with the SEC on March 29, 2012. The results of operations
for interim periods are not necessarily indicative of the results expected for a full year or for any future period. The condensed
consolidated balance sheet as of December 31, 2011 and any related disclosures have been derived from the December 31, 2011 audited
financial statements filed in the Company’s 2011 Form 10-K.

7

The accompanying consolidated financial statements include
the accounts of Global Food Technologies, Inc. and its wholly owned subsidiary, iPura Food Distribution Company, Inc. All significant
intercompany balances and transactions have been eliminated in consolidation

Accounting policies

Use of estimates

The preparation of financial statements
in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect
the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those
estimates.

Inventory

Inventory is stated at the lower of cost (first-in, first-out)
or market. Market is determined by comparison with recent sales or net realizable value. Management reviews the carrying
value of inventory in relation to its sales history and industry trends to determine an estimated net realizable value. Changes
in economic conditions or customer demand could result in obsolete or slow moving inventory that cannot be sold or must be sold
at reduced prices and could result in an inventory reserve. No inventory reserves were considered necessary as of June 30, 2012.

Revenue recognition

The Company recognizes revenues when all of the following conditions
exist: a) persuasive evidence of an arrangement exists in the form of an accepted purchase order; b) delivery has occurred, based
on shipping terms, or services have been rendered; c) the Company’s price to the buyer is fixed or determinable, as documented
on the accepted purchase order; and d) collectability is reasonably assured.

Income taxes

The Company has no significant income
tax expense or benefit for the periods presented due to its current period losses, its tax net operating loss carryforwards and
related 100% deferred tax asset valuation allowance.

Loss per common share

Basic loss per common share for the three
and six months ended June 30, 2012 was computed using the weighted average number of shares of common stock outstanding during
each respective period. Diluted loss per share for those periods have been computed based on the weighted average number of common
shares outstanding, giving effect to all dilutive potential common shares outstanding during the respective periods. There were
a total of 11,420,061 potential common shares not used in the computations of diluted loss per share for the three and six months
ending June 30, 2012 relating to outstanding shares of Convertible Preferred Stock, Common Stock purchase warrants and Common
Stock options.

8

Reclassifications

Certain reclassifications have been made to the December 31,
2011 financial statements to conform to the June 30, 2012 presentation.

Subsequent events

Management has evaluated events subsequent
to June 30, 2012 through the date that the accompanying condensed consolidated financial statements were filed with the Securities
and Exchange Commission for transactions and other events which may require adjustment of and/or disclosure in such financial
statements.

2. Trade Finance Notes Payable

Trade finance notes payable represent
promissory notes, secured by inventory, issued in series of maturities from one to three years with annual interest rates from
8.2% to 9.8%. Funds received are controlled by a third-party custodian. Proceeds from sale of inventory by the Company upon collection
are applied to the trade financing debt. At June 30, 2012, the Company owed $1,182,423 in trade financing debt. Individual
notes mature on their anniversaries through 2013 and based on past renewal activity; we expect that the majority will be renewed
upon maturity. None of this debt is in default.

3. Notes Payable - Other

In July 2009, we borrowed $126,000 from
a third party. The note had a one year term and was renewed at its maturity. The note is now due in March 2013, bears interest
at 9%, is unsecured and is convertible into common stock at the option of the lender at any time at a fixed price of $4.50 per
share. An additional $120,000 was borrowed from the same third party in 2010 in two, unsecured, one-year notes bearing interest
of 9%. Such notes were renewed at maturity andare due in June and July 2013, respectively.

In 2006, we entered into a 30 day bridge loan in the amount
of $350,000 from a non-principal shareholder. The loan bears interest at eight percent (8%) per annum and is secured by all Company
assets, including any intellectual assets. Additional consideration included the issuance of warrants to purchase 35,000 shares
of our common stock. The warrants are exercisable at $4.50 per share for two (2) years from the date of repayment. In July 2006,
$100,000 of principal was repaid. The remaining balance of $250,000 is due on demand. The loan is guaranteed by the President
of the Company.

4. Notes Payable - Related Parties

Director loan

In 2006, we entered into demand loans
aggregating $190,000 from a Director of the Company, bearing interest of 8%. Additional consideration for the loans was approved
by the Board in August 2006, in the form of warrants to purchase 29,000 shares of our common stock. The warrants are exercisable
at $4.50 per share for two (2) years from the date of repayment. In August 2006, we entered into an additional loan, a six month
bridge loan, for $100,000 from the same Director bearing interest at 8%. The loan was renewed each subsequent maturity for an
additional six months and now matures in November 2012. Such loans are unsecured. In January 2008, the note holder was awarded
78,000 shares of common stock valued at $351,000 as additional consideration for extending the maturity of the loans.

9

In November 2010, the Company borrowed an additional $100,000
at 12% interest rate from the same director, due on demand. The loan is unsecured.

The aggregate indebtedness to the Director as of June 30, 2012
is $390,000.

5. Short Term Convertible Note Payable

On November 22, 2010, a stockholder loaned the Company $1,300,000
on a six month note bearing interest at 18% per annum. Upon its initial renewal in May 2011, and payment of the renewal bonus
in the amount of $58,500, which was charged to interest expense and paid in shares of common stock at $2.25 per share, the interest
rate was reset to 9% per annum. The note has been subsequently renewed, and is currently due November 2013. Interest is payable
at maturity in shares of Company common stock at the rate of $2.25 per share. At the sole option of the lender, the principal
may also be converted into shares of Company common stock at the rate of $2.25 per share. The note is secured by all of the assets
of the Company and is subordinate to the 2006 shareholder loan of $250,000.The Company expects that such note will be renewed
or converted to Common Stock upon maturation. Currently, the Company does not have the ability or resources to repay such loan
if a demand is made for repayment in full in cash at the scheduled maturity date.

6. Stockholders’ Deficit

Common Stock Issuances

We have been selling stock to fund operations
since inception and expect to continue to sell stock to fund continued operations.

In the six months ended June 30, 2012,
a total of 381,870 shares of common stock were issued in private placements for proceeds of $957,651, net of $7,350 of issuance
costs, at prices of $2.39 to $3.50 per share.

During the six months ended June 30, 2012,
a total of 64,887 shares of common stock valued at $145,996, were issued for accrued director fees, interest and accrued interest.

Warrants

There are 9,676,248 warrants outstanding as of June 30, 2012
exercisable until December 31, 2013 at $3.00 to $7.00, in conjunction with the issuance of notes payable, sales of common and
preferred stock and payment for services.

The above securities were issued under
exemption from Regulation under either Regulation D or S promulgated by the Securities and Exchange Commission under the Securities
Act of 1933.

Equity Subscription

In April 2012, the Company entered into
a Subscription Agreement with an existing holder of shares of our Series C Preferred Stock for the purchase of additional shares
of common stock. Pursuant to the terms of the Subscription Agreement, the stockholder will purchase up to $2.9 million of Common
Stock at a purchase price of $2.39 per share. The initial purchase was for $500,000, which funds were received by the Company
as of April 30, 2012. Subsequently, one additional installment of $300,000 was received in June 2012 along with two installments
in July 2012. The additional purchases are structured as eight monthly installments of $300,000 each beginning in May 2012. However,
the purchaser may cancel any or all of the remaining installments at the purchaser’s discretion, without penalty.
No warrants will be issued in connection with this sale.

10

ITEM 2. MANAGEMENT’S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Company Overview

Our iPura®
System is the physical on-site processing element of the “iPura®
Food Safety Program”, which combines various food safety
elements described below. Our latest generation iPura®System is designed
to process seafood, with certain customization required for different types of seafood and the specific requirements of a given
installation site.

In 2009, we completed the installation
of our iPura® System at a food processor located in China, Tongwei
(Hainan) Aquatic Products Co., and began producing our first order of inventory and selling it in the United States. We completed
installation of a second, larger iPura® System with a processor in
Vietnam in early 2010, but had to remove the installation after quality control and solvency issues arose with that processor.
We are seeking an alternative processor in Vietnam for the installation. We have a third system installed at another processor
in China, which was installed at Evergreen Aquatic Inc, a vertically integrated tilapia producer located in Zhanjiang City, Guangdong
Province, China. We expect this system to be operational in the last half of 2012. Our fourth system is at our Hanford, California
warehouse facility and is able to be installed if capacity is required

From the commencement of our research
and development activities in 2001, we have raised substantial equity capital to fund the development of our iPura®
System. At June 30, 2012, the Company has an accumulated deficit approximating $69,500,000, and for the six months
ended June 30, 2012 negative cash flows from operations of approximately $1.3 million. Additionally, the Company has negative
working capital at June 30, 2012. Research on our first generation prototype was completed in 2004, and development and refinement
on the commercial system design continued through 2005, especially adapting the system to processing salmon. Further development
has resulted in a more efficient, less labor intensive and more easily maintained processing system.

The Company is executing its marketing strategy by promoting
the iPura® brand to food processors and industry associations as the world’s first food safety label. In addition
to selling to retail chains on a wholesale basis, we are promoting a private label program to large retailers to exclusively source
iPura labeled products to protect their own brand. In our vision, an established leader would enthusiastically “champion”
the iPura® brand by promoting the iPura® logo next to its name on their product packaging, with the iPura®
seal also displayed on the individually wrapped fillets inside the package (“iPura® inside”). This
would communicate to customers that the retailer is doing everything possible to improve food safety, food quality and sustainability
of natural resources. Our value proposition to retailers is that sourcing iPura® products will allow the retailer to
increase control & trust of foreign suppliers, protect their brand and company image, and increase sales with repeat purchases
due to superior products. Our private label program is a cost plus price model, earning a gross profit per pound with full transparency
on cost of raw materials, the iPura® Program, logistics and a gross profit for the Company.

11

The iPura®
seal isanchored with a descriptive and lasting slogan:“The Highest
Standard in Food Safety™”.

· The
science and marketing connect well with world food safety issues.

· The
iPura® label is a tool which communicates that exceptional food safety measures
have been taken to protect consumer health.

· The
label will serve to identify food products that have a higher level of safety and quality.

· GFT
has filed trade marks for its brand and slogan in every major food producing and food consuming nation.

The iPura®
Food Safety Program is the constitution of the iPura® food safety
brand, which includes:

The iPura®
Food Safety Program is designed to help the food distribution chain grow their margins by increasing the quality,
safety, and economic value of their products by reducing or eliminating the waste and liability associated with the distribution
of contaminated food, and by increasing shelf life.

Distribution and Marketing Plan

Management believes that it is commercially
feasible to create recurring revenue streams through service, sales, and licensing to capitalize on the potential of our proprietary
technologies, market opportunities and human resources. We have identified four potential price-per-pound
revenue models and in each model, GFT will provide the daily on-site service to maintain control of The Highest Standard in Food
Safety and Quality.

We are proceeding to validate iPura®
with sales in the U.S. markets through the “importer model” and “private label brand manufacturer
model” (co-branding). This has allowed the iPura® brand to gain a limited amount of market recognition which
management believes will lead to important private label brand manufacturing sales. After the private label business is proven,
we intend to pursue growth by adding more food products and by licensing strategic partners to distribute iPura®
labeled products internationally, thereby creating additional streams of recurring revenue. Market entry is anticipated
to begin with the most popular aquaculture products: tilapia, striped pangasius (swai), catfish, salmon, and shrimp. Farmed tilapia
is available now, guaranteed to have been processed with the iPura® Food Safety Program.

The iPura® marketing materials
that target large distributors and retailers make a point that iPura® promotes their brand by differentiating their
product from all others in the marketplace. The materials point out that iPura® addresses brand protection and
critical food safety and quality assurance issues at a level unmatched in the industry. Marketing materials also point out that
today’s consumers expect a higher degree of food safety and most believe that not enough is being done to protect their
health. The iPura® seal represents the highest standards in food safety, quality,
and sustainability.

12

Promotion of the brand, of course, includes
advertising. We advertise in trade publications such as:

One of the most important direct
marketing opportunities of the past year was our presence at the International Boston Seafood Show, held in March of 2011. We
had the opportunity to meet with top executives from our target prospect list as well as to conduct interviews with media to promote
the iPura® brand and private label business. We believe that this direct approach to large
distributors and retailers, combined with media coverage and a limited amount of consumer marketing will result in the market
acceptance of the iPura® brand.

Consumer
marketing currently is limited to a social media presence and our contract with Global Media Fund, LLC to place articles describing
iPura® food safety in various newspapers throughout the U.S. Currently, most
of our retail sales, such as at grocery stores, are made to customers without any prominent iPura® branding. We hope
to improve point-of-sale branding and have developed descriptive brochures and educational materials for display at supermarkets
where seafood with the iPura® seal may be sold. The Social Media core tools: Facebook,
Twitter, YouTube and Blogger are used to publicize iPura within industry thought leaders and directly
to consumers.

Processor and Distribution Agreements

We have installed three iPura®
Systems under installation and supplier agreements, two in China and one in Vietnam. One system in China has been operating
since 2009, producing tilapia fillets, which is our only source of revenue at this time. The other system has been installed with
a different processor in China and is expected to begin producing iPura® tilapia product in the last half of 2012.
Vietnam was scheduled to begin production of pangasius/swai (a catfish) in the second quarter of 2011. However, quality of product
and plant sanitation did not meet iPura® standards as microbial loads on product and processing equipment
were very high. Also in the 4th quarter of 2011, it was reported that the Vietnamese supplier was in danger of being
declared insolvent and management removed the iPura® equipment, including laboratory equipment, to protect
against such occurrence and a potential lock out. We are currently waiting for the Vietnamese company to remedy the deficiencies
as well as to update their financial reports. GFT management is currently evaluating other factories in Vietnam for installation
and production.

Under these agreements, GFT is generally
responsible for the cost of manufacturing, fabricating and installing the iPura® System at the processors’
facilities, with the processors providing power and utility connections and certain other operating expenses. Our
iPura® System is typically installed onto one or two processing lines at the processors’ facilities. Our
iPura® System will be operated and supervised by GFT personnel, at GFT’s expense. Seafood processed
through our iPura® System will then be packaged and labeled with our iPura® seal. Our wholly owned
subsidiary, iPura Food Distributors, has the exclusive rights to buy and distribute the seafood processed with our iPura®
System and the processors therefore cannot sell such seafood to any other customers or distributors, or otherwise use our
iPura® System for any other seafood processing. The agreements have terms that range from one to three years from the
date of completion of the installation of our iPura® System at the respective processor’s facility. IFD
has obtained most favored nations pricing with respect to seafood purchased under all of the agreements. None of the agreements
have any minimum purchase requirements for IFD, although one agreement has a target volume schedule, with potential increases
to the per pound seafood price if such targets are not met.

13

We have received limited purchase orders
to date for our products and continue negotiations with certain select U.S. grocery store retailers, including negotiations with
regional and national retailers. With this “importer” sales model, we will need to obtain adequate financing
in order to purchase the seafood from the processor and carry the seafood inventory costs until resold to a sub-distributor or
retailer. The marketing focus is now on the private label business with these same retailers and is expected to require much less
inventory carrying cost.

Liquidity and Capital Resources

Historically, our primary source of cash
has been the sale of equity instruments to investors. Although we expect to generate increasing revenue from increased sales of
seafood processed with our iPura®Systems within the next 12 months, any funds generated from installing and
operating our iPura® Systems during the next 12 months are not expected to cover our operating expenses.

Based on our cash balance as of June 30,
2012, we are in need of immediate additional financing to fund our current working capital and capital requirements. Furthermore,
we believe that we will need approximately $10 million to manufacture iPura®
Systemsand cover operating expenses during the next twelve months, in addition to a financing vehicle or a line of credit
to finance the inventory of iPura®product. As an alternative to a traditional
commercial bank line of credit, we have implemented a program, described below, to finance inventory. The amount of capital required
will vary depending on a variety of factors, many of which are beyond our control. We cannot assure that funds from our future
operations or funds provided by our current financing activities will meet the requirements of our operations, and in that
event, we will continue to seek additional sources of financing to maintain liquidity. Any additional capital we raise may
involve issuing additional shares of common stock or other equity securities, or obtaining debt financing, which could be convertible
into equity securities. However, at this point, we have not specifically identified the type or sources of this funding.

As of June 30, 2012, we had trade indebtedness
in the ordinary course of business as well as other debt in the form of continuing short term loans of $640,000 from a Director
and a shareholder due on demand, and one-year notes from a third party in the amount of $246,000, due in 2013.

In 2010, we obtained $1,300,000 pursuant to a six month note
bearing interest at 18% per year. The note was twice extended for an additional six months upon payment of a renewal bonuses paid
in stock which reset the interest rate to 9% per year.. Interest is payable at maturity in shares of Company common stock at the
rate of $2.25 per share and is recorded as current interest expense. At the sole option of the lender, the principal may also
be converted into shares of Company common stock at the fixed rate of $2.25 per share. Pursuant to a security agreement, the note
is secured by all of the assets of the Company and is subordinate to a 2006 related party note of $250,000. Currently, we do not
have the ability or resources to repay such loans if a demand is made for repayment in full. In such event, this secured lender
could foreclose on all of our assets as part of its security interest.

We have implemented a trade financing
program for individual accredited investors as an alternative to traditional commercial inventory financing and factoring. This
financing program consists of issuing promissory notes, secured by inventory, in a series of maturities from one to three years
with annual interest rates from 8.2% to 9.8%. The funds are received and controlled by a third party custodian to be disbursed
for third party costs of inventory. As is typical of trade financing, the Company’s collected sales proceeds will be applied
to trade financing debt. At June 30, 2012, the Company had $1,182,423 in trade financing debt on one year notes. They mature on
their anniversaries throughout 2012 and 2013 and based on past renewal activity, we expect that the majority will be renewed upon
maturity.

14

We are actively pursuing all potential
financing options as we look to secure additional funds both to stabilize and to grow our business operations. Our management
will review any financing options at their disposal, and will judge each potential source of funds on its individual merits. Since
we have not located any commercial bank inventory financing, we developed limited inventory debt financing with other private
parties, as described in more detail above. Successful inventory financing is critical to fund the distribution of our products
and generate revenue. We cannot assure you that we will be able to secure additional funds from debt or equity financing, as and
when we need to, or if we can, that the terms of this financing will be favorable to us or our stockholders.

We believe that we have adequate plant
capabilities and capacity and sufficient qualified personnel to achieve our planned operations over the next 12 months. Historically,
the fabrication of major components of our iPura® System have been outsourced.
We will likely continue this practice, and may also elect to outsource the integration and installation of the units depending
on the number of units installed and the logistics of a particular site. We will add non-technical support personnel as required
to manage the increase in administrative activity.

Results of Operations

Sales:

In the quarter ended June 30, 2012, sales
were $36,540, all of which were to The Meat Market, a regional distributor. In the comparable quarter in 2011, sales were $11,872
of which 71% were to Certi-Fresh Foods. This constitutes an increase of 208% , which is attributable to the regular recurring
orders from the Meat Market during the quarter ended June 30, 2012. However, sales for the six month period ended June 30, 2012
were $66,276 a decrease of 35% from $101,438 in 2011. This reflects the policy of adopted after the first quarter of 2011 to concentrate
on pricing using the cost plus pricing with only larger retailers and distributors.

In 2011, we negotiated with Safeway, Inc.
to expand our product offering to a co-branded two pound bag. Raw product pricing mandated that we should have a dual source for
the tilapia product for Safeway, which required the installation of an iPura processing system in the Evergreen processing plant
and was accomplished by the end of 2011. We anticipate that the sales to Safeway in 2012 will be filled from the Evergreen Aquatic
processor, while the production of iPura branded product will continue to be produced by the Tongwei processor.

We anticipate an increase in volume from
both Safeway and other existing customers and additional sales to new chains and distributors as they respond to our marketing
programs. We anticipate that our gross margins, approximately 11% for the quarter ended June 30, 2012, will remain at that level
based on our transparent pricing model of “cost plus,” which is computed on a 25 cents per pound gross profit margin.
This model is planned to differentiate iPura product from the existing commodity-based product pricing model we currently experience
in the marketplace.

Expenses:

Our net loss for the quarter ended June
30, 2012 was $796,659, compared to $899,162 for the comparable quarter in 2011, a $102,503 decrease of 11%. The net loss for the
six month periods ended June 30, 2012 and 2011 also decreased $443,140 or 23% from $1,897,356 in 2011 to 1,454,216 in 2012. The
decreases can be attributable, generally, to the reduction in activity by all departments while negotiating with Safeway to resume
production. Marketing expenses remained constant in the 3 month comparable periods but decreased 28% in the six month comparable
periods due to the lower cost marketing approach to the Boston Seafood Show of attendance without exhibiting. General and Administrative
expense decreased 18% or $58,328 from $322,081 in the 2011 quarter to 263,753 in the quarter ended June 30, 2012 due to the reduced
level of activity especially travel expense. General and Administrative expenses for the comparable six months periods decreased
21% for the same reasons Research and Development expenses decreased 25% or $64,535 from $256,106 in the 2011 quarter to $191,571
in the quarter ended June 30, 2012 and 33% or $172,719 for the six month comparable periods due specifically to the completion
of testing of an improved antimicrobial solution in 2011 as well as the satisfactory upgrade of the iPura system for the Evergreen
Aquatic installation in 2011.

15

Interest expense increased between the
three month periods by 29% or $30,014 but remained relatively constant between the six month periods attributable to the reduction
of the interest rate from 18% to 9% on the $1,300,000 convertible note but offset by the payment of renewal bonus interest with
stock at the renewal date.

Depreciation expense remained relatively
constant between the comparable three month periods, with only one iPura system having been installed and depreciated, but will
increase if additional systems are installed. The cash used in operations decreased by approximately 18% from $1,583,675 to $1,298,994
between the six month periods ended June 30, 2012, resulting from the reduced level of activity represented by the lower net loss.

Off Balance Sheet Arrangements

We have no off-balance sheet arrangements.

Customer and Supplier Concentration

Our revenue for the three and six months
ended June 30, 2012 was derived from a single customer, The Meat Market. We expect this customer concentration with The Meat Market
as well as with resumed sales to Inland Seafood and Safeway, Inc. to continue in the short-term as we seek to expand our sales
with these major customers, but anticipate that customer concentration will eventually begin to decline if we are able to expand
our customer base and effectively market and brand iPura.

As described above, subject to financial
resources and obtaining purchase orders, we anticipate purchasing and processing additional inventory from another supplier located
in China by the third quarter of 2012. Therefore, we anticipate continued dependence upon a very small number of suppliers. The
future loss of any major customer or supplier could have a material adverse effect on our business, financial condition and results
of operations.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK

A smaller reporting company is not required to provide the
information required by this Item.

ITEM 4. CONTROLS AND PROCEDURES

We maintain disclosure controls and procedures (as defined
in Rule 13a-15(e) and Rule 15d-15(e) under the Securities Exchange Act of 1934, as amended, which we refer to as the Exchange
Act) that are designed to ensure that information required to be disclosed in our periodic reports filed under the Exchange Act
is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC, and that
this information is accumulated and communicated to our management, including our principal executive/financial officer, to allow
timely decisions regarding required disclosure.

16

Our management, with the participation and supervision of our
Chief Executive Officer and Chief Financial Officer (“Certifying Officers”), evaluated the effectiveness of our disclosure
controls and procedures as of the end of the period covered by this Quarterly Report on Form 10-Q. In designing and evaluating
the disclosure controls and procedures, management recognized that any controls and procedures, no matter how well designed and
operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, the design of disclosure
controls and procedures must reflect the fact that there are resource constraints and that management is required to apply its
judgment in evaluating the benefits of possible controls and procedures relative to their costs.

Based upon that evaluation, our Certifying Officers concluded
that as of the end of the period covered by this Quarterly Report, our disclosure controls and procedures were not effective. Our
primary material weakness has been due to our limited number of personnel and, therefore, segregation of duties.

Changes in Internal Control Over Financial Reporting

There was no change in our internal control over financial
reporting that occurred during the period covered by this Quarterly Report on Form 10-Q that has materially affected, or is reasonably
likely to materially affect, our internal control over financial reporting.

PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

We are not a party to any legal proceedings and, to our knowledge,
no such proceedings are threatened or contemplated against us.

ITEM 1A. RISK
FACTORS

A smaller reporting company is not required
to provide the information required by this Item. However, please note the following about forward-looking statements and the
following brief description of certain risks that could have a material, adverse impact on the Company and its operations.

Cautionary Information Regarding “Forward-Looking
Statements”

This Quarterly Report on Form 10-Q includes
certain statements about us that may be deemed to be “forward-looking statements” within the meaning of the Private
Securities Litigation Reform Act of 1995. These forward-looking statements relate to matters such as, among other things, product
development and acceptance, our anticipated financial performance, business prospects, technological developments, new products,
future distribution or license rights, international expansion, possible strategic alternatives, new business concepts, capital
expenditures, consumer trends and similar matters.

Forward-looking statements necessarily
involve known and unknown risks, uncertainties and other factors that may cause our actual results, levels of activity, performance
or achievements to be materially different from any future results, levels of activity, performance or achievement expressed or
implied by these forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as
“may,” “will,” “should,” “could,” “intend,” “expect,”
“anticipate,” “assume,” “hope,” “plan,” “believe,” “seek,”
“estimate,” “predict,” “approximate,” “potential,” “continue” or the
negative of these terms. Statements including these words and variations of these words, and other similar expressions, are forward-looking
statements. Although we believe that the expectations reflected in our forward-looking statements are reasonable based upon our
knowledge of our business, we cannot absolutely predict or guarantee any future results, levels of activity, performance or achievements.
Moreover, neither we nor any other person assumes responsibility for the accuracy and completeness of these statements.

17

We note that a variety of factors could
cause our actual results and future experiences to differ materially from the anticipated results or other expectations expressed
in these forward-looking statements. The risks and uncertainties that may affect our operations, performance, development and
results include, but are not limited to, the following:

·

whether
we will be able obtain
additional financing
to continue or expand
operations and to
finance inventory
costs, and the terms
on which we will
be able to obtain
this financing, if
at all;

·

whether
we will be able to
charge a premium
for our products
and generate adequate
gross margins on
our sales;

·

our
ability to obtain
any commercial financing
to allow us to purchase
seafood inventory
for processing in
our iPura™
System,
and to obtain such
financing in amounts
required and on commercially
reasonable terms;

·

our
dependence on a small
number of customers
and suppliers;

·

our
ability to negotiate
contracts and purchase
orders with distributors
and retailers;

our
ability to obtain
one or more third-party
manufacturers for
our system components
and other products;

·

the
cost at which we
will be able to have
our system components
and other products
manufactured, if
at all, and the time
it will take to have
our system components
and other products
manufactured;

·

our
ability to obtain
all required components
for our systems on
a timely basis and
at the prices we
anticipate;

·

whether
our systems and products
are viewed as providing
the benefits we claim
and whether these
benefits are marketable
by any customers
we may seek to obtain;

·

our
ability to enter
into additional contracts
with food processors,
the time it takes
for us to enter into
any of these contracts
and the licensing
or pricing models
we are able to implement;

·

our
systems and products
performing in the
manner we expect
in customer applications
and without any material
modifications;

·

our
ability to obtain
all necessary governmental
approvals for our
systems and other
products, including
all required import-exporter
licenses and permits;

·

whether
the introduction
of the iPura™
brand will
succeed in creating
preferences with
the consuming public;

·

whether
we will be able to
apply our technology
to products other
than fish or use
our technology in
any other fields;

18

·

the
pace at which we
will utilize our
existing working
capital and whether
our existing working
capital will be sufficient
for us to continue
to develop our systems
and products to the
extent we anticipate;

·

our
ability to protect
our intellectual
property and obtain
and maintain patents
and other protections
for our intellectual
property.

·

the
possible impact from
competing products
or technologies;

·

possible
reductions in consumer
demand for fish and
poultry, including
as a result of any
outbreaks of disease,
including avian flu,
or negative reports
regarding the health
benefits of fish
and poultry;

·

our
ability to hire,
train and retain
a consistent supply
of reliable and effective
employees, both domestically
and in any countries
in which we might
be able to install
one of our processing
system;

·

the
risk of non-payment
by, and/or insolvency
or bankruptcy of,
our customers and
others with indebtedness
to us;

·

the
costs of complying
with applicable labor
laws and requirements,
including, without
limitation, with
respect to health
care;

·

economic
and political instability
in foreign countries
or restrictive actions
by the governments
of foreign countries
in which we may seek
to conduct our business
or obtain customers;

·

changes
in tax laws or the
laws and regulations
governing food processing
and on income generated
outside the United
States;

·

general
economic, business
and social conditions
in the United States
and in foreign countries
where we may conduct
our business;

·

fluctuation
in interest rates,
insurance, shipping,
energy, fuel and
other business utilities
in any countries
in which we conduct
business;

·

the
stability of and
fluctuations in currencies
in which we conduct
business;

·

threats
or acts of terrorism
or war; strikes,
work stoppages or
slow downs by labor
organizations in
any countries in
which we conduct
business; and

·

natural
or man-made disasters
that could adversely
impact the industries
or countries in which
we conduct business.

ITEM 2. UNREGISTERED SALES OF EQUITY
SECURITIES AND USE OF PROCEEDS

Sales of Unregistered Securities

During the period covered by this Quarterly
Report, we issued the following securities, discussed below, which were not registered under the Securities Act of 1933. We did
not employ any form of general solicitation or advertising in connection with the offer and sale of the securities described below.
In addition, we believe the purchasers of the securities are “accredited investors” for the purpose of Rule 501 of
the Securities Act. For these reasons, among others, the offer and sale of the securities listed below were made in reliance on
the exemption from registration provided by Section 4(2) of the Securities Act, Regulation D and/or Regulation S promulgated by
the Securities and Exchange Commission under the Securities Act.

19

During the three months ended June 30,
2012, a total of 334,728 shares of common stock were issued in a private placement for proceeds of $800,000.

Purchases of Equity Securities

We are required by the Securities Act
of 1933 to disclose, in tabular format, any repurchases of our securities during this reporting period. We did not repurchase
any of our securities during this reporting period, and accordingly, we have eliminated such table.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

During the six month period ended June
30, 2012, there were no material defaults in the payment of principal or interest, a sinking or purchase fund installment, or
any other material default not cured within 30 days or with the consent of the lender, with respect to any of our indebtedness
exceeding 5% of our total assets. However, as noted above under “Liquidity and Capital Resources” in Part I, Item
2, we have certain notes that are due upon demand, and we do not currently have the resources to repay such notes if demands for
immediate payment in full were made.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5. OTHER INFORMATION

(a) Information
Required To Be Disclosed In A Report On Form 8-K, But Not Reported

None

(b) Item
407(c)(3) of Regulation S-K

During our fiscal quarter covered by this
Quarterly Report on Form 10-Q, there has not been any material change to the procedures by which our security holders may recommend
nominees to our Board of Directors.

20

ITEM 6. EXHIBITS

Exhibit
No.

Description

3.1 (1)

Restated Certificate of Incorporation dated October 18, 2005.

3.2 (1)

Second Amended and Restated Bylaws as of August 31, 2005.

3.3 (2)

Certificate of Designation of Rights, Preferences and Privileges – Series B Preferred Stock

3.4 (3)

Certificate of Designation of Rights, Preferences and Privileges – Series C Preferred Stock

31.1*

Certification of Chief Executive Officer pursuant to Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302
of the Sarbanes-Oxley Act of 2002.

31.2*

Certification of Chief Financial Officer pursuant to Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302
of the Sarbanes-Oxley Act of 2002.

32.1‡

Certification of Chief Executive Officer and Chief Financial Officer pursuant to pursuant to 18 U.S.C. Section 1350, as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

101.INS ‡‡

XBRL Instance Document

101.SCH ‡‡

XBRL Taxonomy Schema

101.CAL ‡‡

XBRL Taxonomy Calculation Linkbase

101.DEF ‡‡

XBRL Taxonomy Definition Linkbase

101.LAB‡‡

XBRL Taxonomy Label Linkbase

101.PRE ‡‡

XBRL Taxonomy Presentation Linkbase

* Filed herewith

‡ Furnished herewith.

‡‡ XBRL (Extensible Business Reporting Language)
information is furnished and not filed or a part of a registration statement or prospectus for purposes of Sections 11 or 12 of
the Securities Act of 1933, as amended, is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934,
as amended, and otherwise is not subject to liability under these sections.

(1)

Filed on November 23, 2005 as an
exhibit to our Quarterly Report on Form 10-QSB for the quarterly period
ended September 30, 2005 and incorporated herein by reference.

(2)

Filed
on July 15, 2009, as an exhibit to our Report on Form 8-K and incorporated
herein by reference.

(3)

Filed
on December 11, 2009, as an exhibit to our Report on Form 8-K and incorporated
herein by reference.

21

SIGNATURES

In accordance with the requirements of the Exchange Act, the
registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

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